Nintendo president Satoru Iwata held a Q&A meeting with investors where he was questioned about the company’s performance and the financial instability that the company has faced during the two most recent fiscal periods. During the meeting shareholders asked Iwata to justify why Nintendo hadn’t undergone “corporate restructuring” and to explain why he insists to keep the current payroll numbers.
Itawa explained that despite the fact that the scale of Nintendo’s business in the United States remains unchanged, the appreciation of the Japanese Yen has affected the repatriated revenue by shrinking the Yen-denominated sales figures. Given that Nintendo mainly carries out development in Japan, most of its costs are incurred there which is why an appreciation of the yen against the dollar generally negatively affects Nintendo’s financial results.
Due to the company’s financial problems are a result of exchange rate fluctuations, Iwata is disinclined to reduce the number of employees.
“If we reduce the number of employees for better short-term financial results, however, employee morale will decrease, and I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world.”
He went on to explain that even though the company has been able to make a profit in the past with a similar level of sales, the situation has change because…
“The manpower required for increasingly complex and advanced product development has totally changed from that of the past. Hence, the number of employees has increased and higher costs have been incurred. In addition, due to development of more elaborate software titles than before, for example, costs associated with localizing titles in English or other languages have risen.
“I know that some employers publicize their restructuring plan to improve their financial performance by letting a number of their employees go, but at Nintendo, employees make valuable contributions in their respective fields, so I believe that laying off a group of employees will not help to strengthen Nintendo’s business in the long run,” he said.
However, Iwata stated that the company will implement appropriate cost-saving measures.